8-K: United States Oil Fund, LP Reports Annual Financial Results for 2024

United States Oil Fund, LP (USO) releases its annual financial statements for the year ended December 31, 2024, highlighting key financial data and compliance with regulatory requirements.

Summary

• United States Oil Fund, LP (USO) has released its annual financial statements for the year ended December 31, 2024.
• The report includes financial statements for 2024, 2023, and 2022.
• The fund's investment objective is to reflect the daily changes in percentage terms of its shares per share net asset value (NAV) to reflect the daily changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma.
• As of December 31, 2024, USO held 11,084 Oil Futures Contracts for light, sweet crude oil traded on the NYMEX.
• The net asset value per share was $75.45 as of December 31, 2024, compared to $66.91 as of December 31, 2023.
• The market value per share was $75.55 as of December 31, 2024, compared to $66.65 as of December 31, 2023.
• Net income for 2024 was $221,118,191, compared to a net loss of $46,043,522 in 2023.
• The fund is not subject to federal income taxes; each partner reports their share of income, gain, loss, deductions, or credits on their own income tax return.
• USO has an unlimited number of shares registered and available for issuance.

Sentiment

Score: 7

Explanation: The document presents a positive shift from a net loss in the previous year to a significant net income, along with increases in NAV and market value per share. However, there are ongoing legal proceedings and market risks that temper the overall sentiment.

Positives

• USO reported a net income of $221.1 million for 2024, a significant improvement from the $46.0 million net loss in 2023.
• The net asset value (NAV) per share increased from $66.91 in 2023 to $75.45 as of December 31, 2024.
• The market value per share increased from $66.65 in 2023 to $75.55 as of December 31, 2024.
• The fund maintains effective internal control over financial reporting.

Negatives

• Total assets decreased from $1,586,712,656 as of December 31, 2023, to $1,099,083,929 as of December 31, 2024.
• Cash and cash equivalents decreased from $952,408,574 as of December 31, 2023, to $727,450,000 as of December 31, 2024.

Risks

• USO is exposed to market risk arising from changes in the market value of its contracts and credit risk from potential failure of counterparties.
• Significant market volatility in the crude oil markets, influenced by factors like the COVID-19 pandemic, supply chain disruptions, and geopolitical events, could affect the value, pricing, and liquidity of USO's investments.
• The insolvency of USOs FCMs could result in the complete loss of USOs assets posted with that FCM.
• The failure or insolvency of USOs custodian could result in a substantial loss of USOs assets.
• USO is subject to legal proceedings, including securities litigation and derivative litigation, which could result in significant costs and liabilities.

Future Outlook

The document does not contain specific forward-looking statements or guidance beyond the fund's stated investment objective and strategies.

Management Comments

• John P. Love, President and Chief Executive Officer of United States Commodity Funds LLC, affirms that the information contained in the Annual Report for the years ended December 31, 2024, 2023 and 2022 is accurate and complete to the best of his knowledge and belief.

Industry Context

USO operates in the commodity pool sector, providing investors with exposure to the crude oil market through futures contracts and other oil-related investments.

Comparison to Industry Standards

• USO's expense ratio, which includes management fees and other operating expenses, is a key metric for comparison against other commodity ETFs.
• Comparable funds include other oil-related ETFs such as the Invesco DB Oil Fund (DBO) and the ProShares Ultra Bloomberg Crude Oil (UCO).
• USO's performance is closely tied to the price of West Texas Intermediate (WTI) crude oil, the benchmark for U.S. oil prices.
• The fund's ability to track the daily changes in the spot price of light, sweet crude oil is a critical measure of its effectiveness.
• The impact of contango and backwardation on USO's returns is a significant factor to consider when comparing its performance to a direct investment in crude oil.

Legal Proceedings

• USCF, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the Lucas Class Action).
• On July 10, 2020, purported shareholder Momo Wang filed a putative class action complaint, individually and on behalf of others similarly situated, against defendants USO, USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, Malcolm R. Fobes, III, ABN Amro, BNP Paribas Securities Corp., Citadel Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, JP Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC, in the U.S. District Court for the Northern District of California as Civil Action No. 3:20-cv-4596 (the Wang Class Action).
• On August 10, 2020, purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes, III (the Mehan Action).
• On August 27, 2020, purported shareholders Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis, Malcolm R. Fobes, III, Nicholas D. Gerber, Robert L. Nguyen, and Peter M. Robinson in the U.S. District Court for the Southern District of New York at Civil Action No. 1:20-cv-06974 (the Cantrell Action) and Civil Action No. 1:20-cv-06981 (the AML Action), respectively.
• On April 6, 2022, USO and USCF were named as defendants in an action filed by Optimum Strategies Fund I, LP, a purported investor in call option contracts on USO (the Optimum Strategies Action).

Related Party Transactions

• USCF receives a management fee equal to 0.45% per annum of average daily total net assets.
• USO shares fees and expenses with Related Public Funds on a pro rata basis based on relative assets.
• USO pays licensing fees to the NYMEX under a licensing agreement.

Stakeholder Impact

• Shareholders are impacted by the fund's performance, NAV, and market value per share.
• Authorized Participants are impacted by the transaction fees for creating and redeeming baskets of shares.
• Employees of USCF are impacted by the management fees received from USO.
• The fund's performance impacts investors seeking exposure to the crude oil market.

Next Steps

• USO will continue to manage its portfolio to meet its investment objective.
• USCF will continue to provide management services to USO.
• USO will continue to monitor and manage its exposure to market and counterparty risk.

Key Dates

Keywords

United States Oil Fund, USO, financial statements, oil futures, commodity, net asset value, crude oil, USCF, derivatives, financial reporting